[Dex, Cex, Popular Exchanges and Trading Cryptos] - Steemit Crypto Academy S5 - Homework Post for Task 7

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1-) Choose any of the following exchanges and develop a basic guide on how to use it, indicating whether it is decentralised or centralised.

• Huobi
• KuCoin
• Waves Dex

OR

2-) Can cryptocurrencies and exchanges be regulated? How do regulations affect the crypto world? Name some countries with regulations.

OR

3-) Explain in your own words what an Exchange is. Differences between a Wallet and an Exchange. Mention the advantages and disadvantages of DEX and CEX. Have you used an Exchange before? tell us about your experience

Hello steemians, its quite a new week on the Steemit Crypto Academy Contest and it is a privilege to participate on this platform. After reading through the lecture, I found out that this was an interesting lecture as presented by prof @imagen. To this, I will be responding to the task given.

3-) Explain in your own words what an Exchange is. Differences between a Wallet and an Exchange. Mention the advantages and disadvantages of DEX and CEX. Have you used an Exchange before? tell us about your experience

*What is an Exchange?

Cryptocurrency exchange is a medium used for changing a digital currency or digital asset to another digital currency or asset or to fiat. This platform works as an online medium where different market prices of asset are displayed based on the demand and supply of the asset at a particular time interval.

Exchange can be made in two ways either by buying or selling. If a particular asset is to be sold out to get another type of asset or fiat, is either the user creates his/her own Ask price which is recorded on the order book or accepts the market price of the asset at that moment. And also, if a particular asset is to be bought in exchange for another asset or fiat, the user can as well creates his/her own Bid price which is recorded also on the order book or accepts the market price of the asset at that moment.

Difference between a Wallet and an Exchange

A wallet is a platform where different crypto assets can be stored while an exchange is a platform where crypto assets can be changed either for another crypto asset or for fiat. Wallets are of different types ranging from cold wallets to hot wallets. And also exchange are of different types; we have centralized exchange and decentralized exchange.

The centralized exchange (CEX) is a type of exchange that is computer-generated where operations and transactions are controlled by a central authority. In this type of exchange, users are not given the authority over their assets but rather accounts are in the custody of the central authority. Examples of such exchange are: Binance, Polonex, coinbase, etc.

The decentralized exchange (DEX) is a type of exchange that is also computer-generated where operations are controlled by the users. In this type of exchange, there are intermediaries (third party) involved. It is an exchange built on blockchains which gives users control authority over his/her funds with the interference of a third party. It is exchange in which the account is in the custody of the original owner. Examples of such exchange are: Uniswap, Justswap, etc.

*Advantages of DEX

• DEX which is built on blockchain network technology allows for the minimizing rate of hacking by fraudsters since every data are recorded on the ledger to be viewed by the public

• It does not require secret or private details of users when opening an account

• It encloses the private information of it user from the public

Disadvantages of DEX

• In DEX, transaction volume is low as compared to CEX

• It is limited to cryptocurrency transactions only

• It takes more time to complete a transaction as compared to the CEX

Advantages of CEX

• It has a higher transaction volume as compared to the DEX

• It allows for the transaction of both cryptocurrencies and fiat money

• It takes shorter time to speed for a successful transaction

Disadvantages of CEX

• CEX is prone to risk of hackers and fraudsters since users account are being controlled by a central authority

• It requires secret and private details of users like bank account, identity document, etc when opening an account

• It discloses private information of it user to the public and this may lead to the risk of insecurity of it users

• It occupies greater liquidity as compared to the DEX

My experience in using an Exchange

I have used an exchange before. The exchange I use happens to be centralized exchange which is the Binance exchange platform.

In my usage of this platform, the following steps was taken as shown together with the screenshots below:

First, I login into the URL: www.binance.com

When the homepage opened, I registered and was verified. I then clicked on the “Trade” option to choose the pair of token I want to exchange. For this, I want to exchange BTC for USDT (BTC/USDT) as shown below:

After selecting the pair I want to exchange, I then clicked on the Buy option, so as to exchange use my BTC and buy USDT as shown below